Fuel Switch Snapshot: HSFO still most affordable

HSFO cheapest fuel in Singapore and Rotterdam

HSFO over $200/mt cheaper than bio-blends

Bio-bunker demand sluggish in Singapore

CHART: The dots represent bunker fuel prices adjusted for calorific contents to become VLSFO-equivalents, and with various estimated levels of EU ETS costs excluded (Rotterdam) and included (Rotterdam to non-EU port and Rotterdam to EU port). ENGINE, PRIMA Markets, NYMEX

HSFO is still the most affordable bunker fuel alternative in both Singapore and Rotterdam. It is $16-28/mt cheaper than fossil LNG and over $200/mt cheaper than the cleaner B24-VLSFO blend in two of world’s biggest ports.

This means that scrubber-fitted vessels can enjoy HSFO as the lowest-priced fuel in these ports, even with estimated EU Allowance (EUA) costs included in their bunker fuel costs.

Fossil LNG is the second cheapest fuel option in Rotterdam and Singapore.

LNG is $61-74/mt cheaper than VLSFO in Rotterdam, and priced $182-193/mt lower than a B24-VLSFO blend with a Dutch HBE rebate included. In Singapore, LNG is at a $63-70/mt discount to VLSFO, and a $178-183/mt discount to B24-VLSFO UCOME.

Rotterdam’s bio-bunker premiums over pure conventional fuels are $131/mt for B24-VLSFO and $100/mt for B24-LSMGO. Singapore's B24-VLSFO premium over pure VLSFO has widened by $30/mt to $101/mt in the past week.

VLSFO

Rotterdam and Singapore’s VLSFO prices have been relatively stable in the past week. They have gained by a modest $6/mt each, and run counter to a slight 0.17/bbl ($1/mt) drop in front-month ICE Brent futures.

VLSFO availability is normal in Rotterdam. For optimal coverage, traders recommend lead times of 4-5 days.

VLSFO demand was weaker in Singapore last week than the week before, when prices had fallen.

Biofuels

Rotterdam’s B24-VLSFO HBE bunker price has moved $8/mt lower in the past week.

Prices for palm oil mill effluent methyl ester (POMEME) - a key biofuel type in the Netherlands - have slumped by $45/mt to $1,323/mt in the past week, according to PRIMA Markets. This seems to have pulled Rotterdam’s bio-bunker price lower. POMEME-based biofuels can qualify for advanced biofuel rebates through the Dutch HBE system.

Singapore’s B24-VLSFO UCOME bunker price has been quite stable, noting a slight $4/mt gain in the past week.

Singapore’s B24-VLSFO has been steady in the past week despite slow demand. Overall demand for bio-bunkers has been sluggish in the spot market, a trader says. Lead times for bio-bunker grades vary between 10-14 days among suppliers.

LNG    

Rotterdam’s LNG bunker benchmark has inched $3/mt lower in the past week. When we add on estimated EUA costs, the price is down by $4/mt – both for voyages between two EU ports, and between EU and non-EU ports.

This price drop was influenced by improved supply signals from Norway’s Dvalin gas field and a robust supply scenario across Europe.

Singapore’s LNG bunker price has remained unchanged in the past week.

Supply concerns due to an outage at Chevron’s Gorgon LNG facility in Australia has been countered by weak demand and high LNG inventories across Asia to keep the price in check. Chevron's Gorgon facility is one of the largest LNG plants in the world, with a capacity to produce 15.6 million mt/year of LNG.

By Konica Bhatt

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